FAR 16.001—Definitions.
Plain-English Summary
FAR 16.001 provides the definitions used in FAR Part 16, which governs types of contracts, contract pricing, and related administration concepts. This section specifically defines four terms: Award-Fee Board, established price, Fee-Determining Official (FDO), and rollover of unearned award fee. These definitions matter because they control how award-fee contracts are structured, how fee decisions are made, and how certain commercial pricing concepts are treated when determining contract price. In practice, the definitions help contracting officers, program officials, and contractors use the same terminology when drafting award-fee plans, evaluating performance, and deciding whether a price qualifies as an established price. The section is short, but it is foundational for understanding award-fee governance and pricing under Part 16.
Key Rules
Award-Fee Board role
The Award-Fee Board is the group identified in the award-fee plan that assists the Fee-Determining Official in making award-fee determinations. The board is not the final decision-maker; it supports the evaluation process as described in the plan.
Established price definition
An established price must be a catalog or market price for a commercial product sold in substantial quantities to the general public, and it must be the net price after standard trade discounts. This definition is important when determining whether a price can be treated as established for acquisition purposes.
FDO authority
The Fee-Determining Official is the designated agency official or officials who review the Award-Fee Board’s recommendations and decide how much award fee the contractor earns for each evaluation period. The FDO has the final agency decision on award-fee amounts.
Rollover of unearned award fee
Rollover means transferring unearned award fee from one evaluation period to a later one, giving the contractor another chance to earn that amount. This concept applies only to award-fee structures that expressly allow such treatment under the plan.
Award-fee plan controls process
These terms operate within the award-fee plan and the broader contract structure. The plan should identify the board, the evaluation periods, the FDO process, and whether any rollover of unearned fee is permitted.
Responsibilities
Contracting Officer
Use these definitions correctly when drafting and administering award-fee contracts and when determining whether a price qualifies as an established price. Ensure the award-fee plan clearly identifies the Award-Fee Board, the FDO process, and any treatment of unearned award fee.
Fee-Determining Official (FDO)
Review the Award-Fee Board’s recommendations and make the final determination of award fee earned for each evaluation period. Apply the award-fee plan consistently and document the decision as required by agency procedures.
Award-Fee Board
Evaluate contractor performance and provide recommendations to the FDO in accordance with the award-fee plan. The board must operate within the roles and criteria established by the contract and plan.
Contractor
Understand the award-fee plan, performance criteria, and any rollover provisions so it can manage performance expectations and fee opportunities. Use the established-price definition carefully when proposing or negotiating commercial pricing.
Agency
Designate the FDO and establish internal procedures for award-fee administration. Ensure award-fee structures and pricing determinations align with FAR Part 16 and the agency’s acquisition policies.
Practical Implications
Award-fee contracts depend heavily on the written plan; if the plan is vague about the board, the FDO, or rollover, disputes are more likely.
The FDO is the final decision-maker, so board recommendations should be well-supported and tied to the evaluation criteria.
Contractors should not assume unearned award fee automatically carries forward; rollover only applies if the contract and plan allow it.
When using commercial pricing concepts, the net price after standard trade discounts matters, not just the headline catalog price.
Misunderstanding who has authority to recommend versus decide can lead to weak documentation, inconsistent evaluations, and protest or claim risk.
Official Regulatory Text
As used in this part- Award-Fee Board means the team of individuals identified in the award-fee plan who have been designated to assist the Fee-Determining Official in making award-fee determinations. Established price means a price that— (1) Is an established catalog or market price for a commercial product sold in substantial quantities to the general public; and (2) Is the net price after applying any standard trade discounts offered by the contractor. Fee-Determining Official (FDO) means the designated Agency official(s) who reviews the recommendations of the Award-Fee Board in determining the amount of award fee to be earned by the contractor for each evaluation period. Rollover of unearned award fee means the process of transferring unearned award fee, which the contractor had an opportunity to earn, from one evaluation period to a subsequent evaluation period, thus allowing the contractor an additional opportunity to earn that previously unearned award fee.